KHAWAJA KHURRAMBB-11-09

GROUP MEMBERS Names: Roll #

Wajiha Noureen. BB-11-02 Khawaja Khurram. BB-11-09 Anam Ehtesham BB-11-15 Zara Malik. BB-11-29 Ramsha Alvi. BB-11-38 Sana Tariq. BB-11-52 Kiran Shahid. BB-11-30 Muhammad Gohar. BB-11-50

TOPIC: SOCIAL SECTORS OF PAKISTAN (HEALTH, EDUCATION, URBANIZATION, ENERGY CRISIS). ROLE OF IMF AND WORLD BANK. STRUCTURAL ADJUSTMENT PROGRAM

OVERVEIW This presentation basically gives the overall review about

the social sectors of Pakistan. It also tells about the changings in the economy. The upward and downward trends of social sectors are explained in it with the help of statistical data and graphs.

Apart from this, energy crisis has been enlightened which is considered to be one of the major problems in Pakistan that is playing a great role in the destruction of Pakistan’s economy.

Role of IMF and World Bank is explained. The purpose is to highlight the impact of Structural Adjustment Program on the economy of Pakistan, that how it leads the country to betterment. Comparison between different countries is mentioned to show clear and visible changes in the economies.

It simply explains the trends in Pakistan economy, due to changes in the social sectors, problems in the sectors, role of IMF in the economy, impact of SAP and comparison of Pakistan with external world.

SOCIAL SECTORS OF PAKISTAN AROUND THE WHOLE WORLD

TRANSPORT AND TELECOMMUNICATION Road system extends approximately 180,000

kilometers in 1992; asphalt roads about 51 percent of total. Number of motor vehicles estimated at nearly 2 million in 1992, including 932,000 motorcycles, 454,000 automobiles, 220,000 tractors, 157,000 trucks and vans, and 37,000 buses.

Telegraph and telephone systems government owned. Pakistan Broadcasting Corporation had monopoly on radio broadcasting with home service of 270 hours daily in twenty languages and world service of ten hours daily in two languages in 1995. Government controlled Pakistan Television Corporation (PTV) transmits daily; privately owned People's Television Network transmits on eight channels; twenty-nine TV broadcast stations; more than 2 million TV sets in use in 1995.

Ports: Karachi, Port Muhammad bin Qasim, Gwadar, and Pasni.

Railroads: 8,775 kilometers total; 7,718 kilometers broad gauge, 445 kilometers 1-meter gauge, and 610 kilometers less than 1-meter gauge; 1,037 kilometers broad-gauge double track; 286 kilometers electrified; most government owned.

EDUCATION Adult literacy is low, but improving. In 1992 more

than 36 percent of adults over fifteen were literate, compared with 21 percent in 1970. The rate of improvement is highlighted by the 50 percent literacy achieved among those aged fifteen to nineteen in 1990. School enrollment also increased, from 19 percent of those aged six to twenty-three in 1980 to 24 percent in 1990. However, by 1992 the population over twenty-five had a mean of only 1.9 years of schooling. This fact explains the minimal criteria for being considered literate: having the ability to both read and write (with understanding) a short, simple statement on everyday life.

IMPROVEMENT The standard of education and the literacy

rate is being improved day by day.

RAMSHA ALVIBB-11-38

HEALTH AND URBANIZATION

HEALTH In 1992 some 35 million Pakistanis, or about 30

percent of the population, were unable to afford nutritionally adequate food or to afford any nonfood items at all.

Between 1985 and 1991, about 85 percent of rural residents and 100 percent of urban dwellers had access to some kind of Western or biomedical health care; but 12.9 million people had no access to health services.

In the early 1990s, the leading causes of death remained gastroenteritis, respiratory infections, congenital abnormalities, tuberculosis, malaria, and typhoid. Gastrointestinal, parasitic, and respiratory ailments.

OVERALL CONCLUSIONFROM THE YEARS 1999-2000 THE LIFE EXPECTANCY IN MALES WAS 64 WHEREAS FOR FEMALES IT WAS 66.

Women's Health Total Fertility Rate: 4.5-4.3 Child Health Rate Infant Mortality :

81.5-79.8 Ratios: 2000-2001 % Vaccinated (1998): 70.7

Populations per Dentist: 3,732-3,639

URBANIZATION The level of urbanization in Pakistan is now the

highest in South Asia, and its urban population is likely to equal its rural population by 2030, according to a report titled ‘Life in the City: Pakistan in Focus’

Pakistan has and continues to urbanize at a faster pace than India. From 1975-1995, Pakistan grew 10% from 25% to 35% urbanized, while India grew 6% from 20% to 26%. From 1995-2025, the UN forecast says Pakistan urbanizing from 35% to 60%, while India's forecast is 26% to 45%.

A 2008 report by UN Population Fund says the share of the urban population in Pakistan almost doubled from 17.4 percent in 1951 to 32.5 percent in 1998.

Approximately three-quarters of the total urban population of Sindh are concentrated in just three urban centers: Karachi, Hyderabad and Sukkur. Karachi is growing so fast that estimate of its population range from 12 million to 18 million.

WALL STREET JOURNAL "Pakistan has to be part of globalization or you end up with Talibanization".

Until we put these young people into industrialization and services, and off-farm work, they will drift into this negative extremism; there is nothing worse than not having a job. But increasing urbanization in South Asia represents both a challenge and an opportunity for India, Pakistan and Bangladesh. It is a challenge because it imposes a rapidly growing burden on the already overcrowded megacities such as Mumbai, Delhi, Dhaka and Karachi.

WAJIHA NOUREENBB-11-02

ENERGY CRISIS IN PAKISTAN

WHAT IS ENERGY CRISIS?

An energy crisis is any great shortfall (or price rise) in the supply of energy resources to an economy. It usually refers to the shortage of oil and additionally to electricity or other natural resources.

INTRODUCTION

Electricity Crisis in Pakistan is one of the severe challenges the country is facing today. Electricity is essential part of our daily life and its shortage has severely affected the economy and overall living of ours. Pakistan is currently facing up to 18 hours of electricity outage a day, is expected to face more if not dealt with in time.

HYDROPOWER ENERGY Present demand of electricity in country in actual

is above 17,000 MW and will be 30,000 MW by year 2017

Energy deficit was 3,000 to 5,000 MW . Hydropower Potential - 100,000 MW 70 % of hydro potential lies in KPK

NUCLEAR ENERGY

Pakistan has around 30 thousand metric tons of uranium (308).

Pakistan has three nuclear reactors of 850 MW power.

It is only 3.4 % of the electricity production.

COAL ENERGY

Pakistan produces only 0.2 % of its power through coal.

The current coal production in Pakistan is only 3.5 million tons per year.

In Pakistan, there are plans to build only two 300 MW coal-fired plants at Thar.

CURRENT ENERGY CRISES Current Energy Annual Shortfall goes even up to

5,000 MW Annual Increase in Energy Demand: 8-12% Peak Demand: 13,000 – 18,000 MW Today’s Energy Shortfall: 3,059 MW

TEN YEARS OF ENERGY CONSUMPTION

SUPPLY AND DEMAND:

CAUSES OF ENERGY CRISES Crises in hydropower energy Crises in coal Crises in oil & gas Crises in nuclear Poor governance Circular debt Corruption Electricity theft

HYDROPOWER

Environmental impact Provincial disputes Geological Long development and construction phase Financing Silting in reservoirs Snow melt unpredictability (climate change?)

COAL Mining challenges (deep mining technology and

lack of expertise) Quality of coal Water requirement Long development and construction phase Financing Environmental impact

OIL & GAS Indigenous resources depleting (oil & gas

reserves) Imported oil based energy expensive and price

volatile Iran pipeline - International politics Burden of energy “insecurity”

NUCLEAR Obstacles due to international concerns Financing Long lead time Project execution delays and cost overruns Cost of waste management Cost of decommissioning

SANA TARIQBB-11-52

ENERGY CRISES EFFECTS, SOLUTIONS & REMEDIES.

Due to energy crises Industrial process stopped and Pakistan has to face economic setback. Consequently, millions of the people working in industrial units have been deployed which made the life of a lay man very sour. Internationally, this economic setback damaged the national dignity of the country very badly .

EFFECTS

According to an estimate, there are 10,000 factories in Lahore, among which approximately 30-40 percent factories have been closed because of load shedding. These factories were utilizing electricity and Sui gas in a huge amount.

EFFECTS ON INDUSTRY

Dry Cleaning Industry

Railroads

Grocery stores

Petroleum Industries

AFFECTED INDUSTRIES

load shedding is destroying the agriculture sector because there are 200,000 electric tube wells in the country to irrigate the land, which could not be run due to electricity shortage , decrease in agriculture production and food shortage in the country.

ON AGRICULTURE

According to the labor department sources, approximately 800,000 laborers have been dispelled from their jobs. While, 400,000 to 800,000 laborers were receiving less wage

UNEMPLOYMENT

Energy crises badly effect education.

Economic development of Pakistan badly affected by Energy crises.

Higher electricity prices.

OTHER EFFECTS

Solar Energy is energy derived from Sun in the form of ultra violet rays. Pakistan has the great gift of God in the form of “Sun Light”. It should be installed in hottest areas of Pakistan. Cottage industry & power looms can be run on this energy.

SOLUTIONS

The power which is produce through the Energy , in Winds is called Wind Energy.

Pakistan is blessed with a large resource of wind corridor.

Govt. should pay attention in this resource.

WIND ENERGY

• Pakistan is meeting 1.50% of its energy requirements from biomass, whose consumption is increasing average at the rate of over 5% per annum. AEDB is actively working for Biogas.

BIO GAS

Pakistan needs to set up at least a Dozen Nuclear Power Plants, large coal fired plants, wind farms and solar plants in the next 10 years to generate about 20,000 MW of electricity.

ENERGY PLANNING

Continuous updating of equipment.

Conservation of energy resources

Exploring coal

Improvement of distribution system.

Exploration of more oil ,gas & coal reserves.

RECOMMENDATIONS

Increase the number of Independent power producers.

Reactivate the closed power generating units. Import electricity to fulfill current need of

industries. Provide training to engineers for new technology.

RECOMMENDATIONS

CONCLUSION!

KIRAN SHAHIDBB-11-30

ROLE OF IMF AND WORLD BANK IN PAKISTAN ECONOMY

INTERNATIONAL MONETARY FUND

ORGANISATION AND PURPOSE The International Monetary Fund was

created in 1944, working to help the development of global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world .

IMF is an organization of 185 countries. The IMF’s fundamental mission is to help

ensure stability in the international system.

PURPOSE: The IMF provides financial assistance to members to help them to correct balance of payments problems in a manner that promotes sustained growth.

ROLE OF IMF

IMF

SURVEILLANCE

LENDSTECHINAL ASSIISTANC

E

IMF PROCEDURE TO HELP

WORLD BANK

ORGANISATION AND PURPOSE The World Bank Group (WBG) was

established in 1944 under the International Bank for Reconstruction and Development (IBRD).

183 member Countries Every member of the IMF is also a member of the

world bank. Purpose It is concerned with assisting its

member countries to achieve sustained economic growth. It functions as an intermediary for the transfer of financial resources from the more developed to the less developed countries.

The Food Crisis

World Food Programme

Agribusiness

Risk Management

Biofuels

IMF ASSISTANCE TO PAKISTAN Pakistan joined IMF on 11th July, 1950. IMF is

providing financial assistance to Pakistan since 1952. According to 1977 statistics, Pakistan borrowed 1193 million dollars from IMF. Since 1980, the fund has made four main agreements with Pakistan as

In November,1980 In December, 1988 In February, 1994 In July, 1997

THE AGREEMENT OF 1980 IMF set the following conditions for Pakistan: Rupee be devalued by 20% in terms of dollar The imports be liberalized Prices should increase and subsides be

withdrawn The custom duty on imports be decreased

and sales and exercise duty be imposed in the country

The industrial sector is liberalized from govt. controls through de-regulations and privatization.

THE AGREEMENT OF 1988 Main objective of this agreement is to

reduce fiscal deficit. But the govt. failed to meet these

conditions. The budget deficit which was 8.7% of GDP in 1990-91 decreased to 8% GDP in 1992-93. This means that the budget deficit could not be decrease appreciably.

THE AGREEMENT OF 1994: reduce the financial deficit to 4% of GDP in 1994-

95 to 3% of GDP in 1995-96 at 5% of GDP for 1994-95 4% for 1995-95 budget deficit was 5.8% of GDP in 1994-95.. a suspension in the attainment of loan of $1.4

billion. the finance minister re-negotiated with IMF.. the fiscal deficit was stipulated at 4% of GDP for

1996-97.. amount of loan was raised from $250 million to

$850 million .. Government of Pakistan neither reduces its

expenditure nor raised tax revenues

THE AGREEMENT OF 1997: In 1997, IMF prepared a ‘Medium Term Policy

Framework Paper’ for the growth and the stabilization of the economy of Pakistan.

1st July, 1997 to 30 June, 2000 .

sanctioned $500 million on January 14, 1999 .

The IMF issued a long structure. Government of Pakistan applied many suggestions but still they failed to impose sales tax at retail level.

The rupee was devalued in 1998. The trade was liberalized.

EFFECTS OF IMF PROGRAMMES

MUHAMMAD GOHARBB-11-50

WORLD BANK AND PAKISTAN

WORLD BANK ASSISTANCE TO PAKISTAN

Supporting reforms at both the federal and provincial level.

In June 2007, the World Bank approved a US$350 million. support Government’s Poverty Reduction Strategy.

At the provincial level: the Bank approved operations worth US$430 million.

For the improve irrigation, education and human development indicators.

 

WORLD BANK WORK WITH PAKISTAN POVERTY ALLEVIATION FUND

World Bank funded Pakistan Poverty Alleviation Fund Project (PPAF).

to reduce poverty and empower the rural and urban poor in Pakistan.

PPAF has issued 1.5 million micro-credit loans, (average loan-size US$ 150), benefiting nearly 9 million people.

Victims of the Earthquake: the government created the Earthquake Relief and

Reconstruction Authority (ERRA) launched an ambitious US$1.5 billion owner-driven

rebuilding program.

IMPROVEMENT OF EDUCATION OUTCOMES programs target to increase participation of girls

and children from poorer houses.

To improve the quality and relevance of its higher education and technical and vocational training system.

Reliance on local expertise: 90 % of their staff is local. from 2006 – 2009, the Bank has approved 30

projects of total US$3.7 billion for Pakistan.

HELPING TO ‘IMPROVE TRADE FLOWS’ AND ‘LOWER TRANSIT COSTS AND TIMES’

In 2005, the Government of Pakistan (GOP) launched major initiatives around the National Trade Corridor Improvement Program (NTCIP).

reduce the cost of trade and transport logistics

to bring services’ quality to international standards

to reduce the cost of doing business in Pakistan

ultimately enhance competitiveness and industrialization.

Safety Nets

Seeds and Fertilizer

Agricultural Research

Export Ban

Remove Trade

Collective Action

ZARA MALIKBB-11-29

STRUCTURAL ADJUSTMENT PROGRAMME

WHAT IS SAP? Structural adjustment programs (SAP) are

the programs initiated by Pakistan in the late 1980s with the assistance of International Monetary Fund (IMF) and the World Bank to stabilize the economy in order to borrow from these institutions

AIM OF STRUCTURAL ADJUSTMENT PROGRAMME (SAP): Liberalizing the economy Promoting competition Making private sector stronger Reductions in the fiscal deficit Reduce domestic demand by restricting the

expansion of money and credit. Reduce inflation and devaluing the national currency. Reducing poverty Increasing the exports of the country Making good use of loans granted to borrower

country Making the country capable of returning back the

loan

WHY THE NEED FOR SAP?

The World Bank and the IMF argue that SAPs are necessary to bring a developing country from crisis to economic recovery and growth.

SAP

Designed forapplying free market principles to the economy

To improve a country’s foreign investment climate by promoting exports & to reduce

govt.deficits through cuts in spending

THE IMPACT OF FOUR POLICY INSTRUMENTS OF SAP

1.reduction in budget deficit 2. increase in indirect taxes 3.adjusting the exchange rate 4.sliding down of subsidies 5.employment 6. income distribution 7. per-capita income and inflation

STRUCTURAL ADJUSTMENT LOAN (SAL) :

Pakistan was among those few countries that have received six

or more adjustment loans since 1980s.• The first Structural Adjustment Loan (SAL)

was granted to Pakistan in 1982. An export development loan was provided to the country for extension of industrial export.

STRUCTURAL ADJUSTMENT FACILITIES (SAF)SAF, were created by the IMF in 1986 and the

country received the largest share. The SAF supported program focused on four essential areas,

raising price incentives for agricultural producers

increasing domestic savings easing bottleneck on supply and fiscal

management liberalizing exchange and trade system.

IMPACTS OF SAPImpact on Employment: SAP has affected the employment negatively. Revenues can be raised through direct taxation

or though indirect taxation.

Expenditure reduction can be attained through cuts in current expenditure or through cuts in development expenditures.

impacts the richlargely impacts the poor

impacts employment generationimpacts existing employment

While employment on account of development expenditure may be productive and employment on account of current expenditure may by non-productive.Current

ExpenditureDevelopment

Expeniture

Increase employment and incomes

Reduces poverty in future

IMPACT ON PER-CAPITA INCOME:• Two variables related with SAP program, i.e.

indirect taxes and subsidies have significantly affected the

per capita income.• Industrial sector did not prepare itself to

compete with international competitors up to early 1980s. It

enjoyed the low taxes on production.• Due to this lenient tax policy the domestic

producers have not tried to be competitive internationally

• To increase taxes was one of the policy directives of SAP.

IMPACT ON INFLATION: the budget deficit in the economy has been

achieved by reduction in development expenditures. It has adversely affected the price level in the economy.

increase in oil prices, gas and electricity charges due to imposition of surcharge were all the results of stabilization strategy which damaged the production sector mostly by increasing the cost of production enormously

So increase in ratio of indirect taxes has adversely affected the economy by shooting up inflation.

CONCLUSION The SAPs are supposed to allow the

economies of the developing countries to become more market oriented. This then forces them to concentrate more on trade and production so it can boost their economy.

Expansion of tax base and strengthening of tax collection mechanisms.

Elimination of subsidies and price controls. Currency devaluation to encourage exports

and rectify the balance of trade. Promotion of free market principles to

stimulate efficient allocation of resources.

ANAM EHTESHAM KHANBB-11-15

REVIEWS AND CONCLUSION

ECONOMY OF PAKISTAN From FY 1951 to FY 1986, the GDP growth rate

measured at a constant FY 1960 factor averaged 5.2 percent. Rates of growth averaged 3.1 percent in the 1950s--when agriculture stagnated--but rose to 6.8 percent in the 1960s. They fell to 3.8 percent between FY 1971 and FY 1977 but rebounded to 6.8 percent between FY 1978 and FY 1986. From FY 1987 to FY 1991, growth averaged 5.8 percent, and a rate of 7.8 percent was achieved in FY 1992. Provisional data indicate that GDP grew only 2.6 percent in FY 1993. This decline is mainly a result of the floods in September 1992, which reduced agricultural output.

CONTINUED Agriculture's share (including forestry and

fishing) declined from 53 percent of GDP in FY 1950 to 25 percent in FY 1993. A substantial industrial base was added as industry (including mining, manufacturing, and utilities) became the fastest growing sector of the economy. Industry's share of GDP rose from 8 percent in FY 1950 to 21.7 percent in FY 1993. Various services (including construction, trade, transportation and communications, and other services) accounted for the rest of GDP.

HEALTH SECTOR REFORMS IN PAKISTAN The goals of health sector reform are to

improve the technical and allocating efficiency of the health care system, enhance the quality of services..

Structural ambiguity created by the lack of integration of services offered by the federal and the provincial governments is a critical issue adversely affecting health care. In short, Pakistan is in need of a far-reaching health sector reform.

ENERGY CRISIS AND POLICY IMPLICATIONS The country’s energy problems are deep and

complex. And the stems of theses problems are:

• The absence of a comprehensive and integrated energy strategy.

• insufficient revenue to support energy generation and infrastructure.

POLICY IMPLICATIONS Pakistan should consolidate its many energy-

related institutions into a single ministry. This will bring some urgently needed order and efficiency to its dysfunctional energy sector.

A short-term fix that could bring immediate relief is to request a new loan from the International Monetary Fund (IMF).

Tax reform is imperative and should be designed to provide Islamabad with more revenue to address the energy crisis.

Pakistan can initially better diversify its energy mix by importing clean coal, which is often cheaper than imported oil and gas.

CONCLUSION AND POLICY IMPLICATIONS FOR SAP First, the results show that reduction in

subsidies has the more adverse impact on the incomes of richest rural and urban households, implying that the richest people in the country are the higher beneficiary of subsidies provided by the government.

Second, the effects of a contraction in government spending appear to be negative on the incomes of all the urban and rural household groups. The largest reduction appears in the income of the richest rural, followed by poorest urban.

CONTINUED Third, the simulation results show that

decline in public expenditure on education and health discourages activities in the education and health sectors. It also shows that the poorest urban and poorest rural are affected more than the other relatively better-off urban and rural income groups.